Property outlook update: 2017 looking good for Perth
Property outlook update:
Property prices grew in Perth and further accelerated in Sydney and Melbourne, according to Corelogic
Property prices in Perth increased by 1.4% in December, Corelogic’s Home Value Index has shown. Whilst year-on-year growth remains negative, at -4.3%, December’s positive performance lifted Perth quarterly growth rate from negative to 2.8%. Commenting on the results, Corelogic’s head of research Tim Lawless noted that “these markets have shown signs of moving through the low point of their respective downturns.”
The good news wasn’t restricted to the West Coast: property price growth increased in Sydney, Melbourne and Brisbane standing at 0.9%, 3.1% and 0.6% for the month of December respectively. Sydney property prices grew 15.5% over 2016, with Melbourne at 13.7%. Correspondingly, according to Corelogic, capital gains grew at the fastest rate since 2009, surging 10.9% across Australia’s capital cities.
Growth in regional areas was relatively slow, with prices growing 2.8% year-on-year. Corelogic’s Lawless attributed this to local economic challenges; “those regional areas with intrinsic ties to the mining and resources sector have continued to record weaker housing market conditions since the end of the mining infrastructure boom.” Regional NSW, with its more diversified economy, was the strongest performer with 7.3% YOY growth.
Looking forward to 2017, Lawless identified several ‘headwinds’ which could reduce house price growth. These included mortgage rates trending upward; high levels of supply in the unit sector, which are due to peak in 2017 and rental yields at record lows, which Lawless said could hit investors: “it is logical to assume investors are largely speculating on future capital gains in dwelling values and disregarding the low yield profile. If housing market investment activity does reduce, it has the potential to mitigate some of the upwards pressure on home values.”
Finally, Sydney and Melbourne’s strong growth has caused these markets to become unaffordable for many buyers, Lawless warned, with Sydney prices now 8.3 times higher than annual household incomes.
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